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The Five Questions

Submitted on January 10, 2014

What is the best time to do things?

Who is the most important one?

What is the right thing to do?

These are three familiar questions for parents of kids who are fans of Jon Muth (or for anyone who’s read Leo Tolstoy). In the children’s book, young Nikolai learns that the answers are, "There is only one important time, and that time is now. The most important one is always the one you are with. And the most important thing is to do good for the one who is standing at your side."

This week, AT&T announced a new program, called Sponsored Data, that will allow businesses working with the wireless carrier to pay for the data that is used by AT&T subscribers to consume the partners’ content or services so that data doesn’t count against subscribers’ data caps. There’s been a great deal of discussion about how this is an innovation and/or a development that, in the end, will hurt consumers and start-ups.

But less-covered this week are initial steps taken by the Republican leadership on the House Commerce Committee to rewrite U.S. communications law. The Communications Act of 1934 consolidated the regulation of telephone, telegraph, and radio communications into a single statute. Title I of the Act created the Federal Communications Commission, replacing the Federal Radio Commission as the body tasked with implementation and regulation of the law. Title II addressed common carrier regulation of telephone and telegraph and title III addressed radio communications, expanded in 1967 to include television broadcasting. The three other original titles addressed administrative and procedural matters, penalties and fines, and miscellaneous matters. An additional title was added in 1984 covering cable television. Although the Communications Act has been updated periodically, it has not had a major overhaul since 1996 – 17 years ago.

As technology evolved and the communications market changed, the FCC’s authority has evolved as well through both judicial decisions and congressional action. The FCC’s jurisdiction includes wireline and wireless communications, television and radio broadcast, satellite operators, and cable television. The FCC is also able to regulate by exercising ancillary jurisdiction over an issue when their general grant of authority covers the regulated subject, and the regulation contemplated is reasonably ancillary to the performance of the FCC’s statutorily mandated responsibilities.

On January 8, House Commerce Committee Chairman Fred Upton (R-MI) and Communications and Technology Subcommittee Chairman Greg Walden (R-OR) released a white paper asking for public input for their review and eventual update of the Communications Act. The white paper focuses on broad thematic concepts for updating the law.

The committee is seeking responses to a series of questions posed in the white paper and is also offering an opportunity for interested parties to comment on any aspect of the Communications Act.

The five questions are:

The current Communications Act is structured around particular services. Does this structure work for the modern communications sector? If not, around what structures or principles should the titles of the Communications Act revolve?

What should a modern Communications Act look like? Which provisions should be retained from the existing Act, which provisions need to be adapted for today’s communications environment, and which should be eliminated?

Are the structure and jurisdiction of the Federal Communications Commission in need of change? How should they be tailored to address systemic change in communications?

As noted, the rapidly evolving nature of technology can make it difficult to legislate and regulate communications services. How do we create a set of laws flexible enough to have staying power? How can the laws be more technology-neutral?

Does the distinction between information and telecommunications services continue to serve a purpose? If not, how should the two be rationalized?

In an op-ed this week, Chairmen Upton and Walden write, “We cannot afford to ignore the burdens and barriers created by our antiquated communications laws.” They say that an update of the Communications Act is “imperative to ensure continued American leadership in improving the connectivity and access to information enjoyed by all Americans. The Communications Act has had a profound impact in shaping the communications landscape, and it is beyond time we examine the law and find ways it can be updated to better meet the needs of today, and promote the innovations of tomorrow.”

Returning to our original three questions, you may be asking ‘Why now? Who is driving this? Is this the right thing to do?’

Chairmen Upton and Walden first announced their efforts around the Communications Act in early December 2013, saying the law had failed to keep pace with developments in telecommunications, especially the growth of the Internet. “We plan to look at the Communications Act and all of the changes that have been made piecemeal over the last 89 years,” said Chairman Walden at the time, “and ask the simple question: ‘Is this working for today’s communications marketplace?’ Our goal is to make sure this critical sector of our economy thrives because of the laws around it, not in spite of them.”

Chairmen Upton and Walden highlight in the white paper that one of the most common criticisms of the Communications Act is the so-called “siloed,” sector-based nature of the law and resulting regulation. By dividing the overall regulatory scheme into separate titles based on specific network technologies and services, the law does not contemplate the convergence of technologies in the modern digital era. While there were historic reasons for separating the Act into service-based titles, the Communications Act and subsequent changes to it did not envision the intermodal competition that exists today. As a result, there are different regulatory obligations based on the mode of technology, even though many of the technologies are functionally equivalent either technologically or from the consumer perspective. Because the FCC is structured in much the same way as the Communications Act, the assorted bureaus and divisions within the agency may duplicate certain functions and fail to cover other functions, resulting in a lack of clear regulatory authority.

Skeptics look at the effort as a campaign finance tool. In addition to chairing Communications and Technology, Rep. Walden is also chair of the National Republican Congressional Committee (NRCC). The NRCC’s mission is to elect Republicans to the U.S. House through direct financial contributions to candidates and Republican Party organizations. Back in December, Politico reported that Rep. Walden put the kibosh on the idea that the new GOP push to rewrite the Communications Act is a thinly veiled attempt to shake down companies for campaign contributions. “You can file that one away in the trash can,” he said. “We’ve talked about updating these laws every since I’ve been around here. We’re starting a process to do that, and we’re very serious about having a process to do hearings, to do white papers, to allow everybody to have a chance to participate.”

This week, four FCC commissioners expressed “optimism” -- they all used the word -- that it would bring about some benefits. Commissioner Jessica Rosenworcel said she certainly believes “Congress can still do big things,” and she pointed to the spectrum reform law as an example. Commissioner Ajit Pai said telecommunications issues “don't often lend themselves to the same partisan divisions” that others do. Commissioner Mignon Clyburn said a “series of conversations, wherever they take place, would be helpful for the environment.” And Commissioner Michael O'Rielly agreed about the bipartisan nature of the debate, adding he thinks Congress should “move forward at a pace they determine is best.”

On January 15, the Communications and Technology Subcommittee will hold its first hearing on the Communications Act update. "As our work begins on a #CommActUpdate, there are few better equipped to provide insight and expertise on the Communications Act than former chairmen of the FCC," said Subcommittee Chairman Greg Walden (R-OR). "I expect the subcommittee will discuss a broad array of issues with the former chairmen as we chart our course to update the law to better fit today's communications marketplace, foster innovation and opportunity, and promote consumer choice, job creation, and economic growth."

Broadcasting & Cable's John Eggerton reports that three former FCC chairs are slated to testify on January 15: Dick Wiley (picked by President Richard Nixon), Michael Powell (Bush), and Reed Hundt (Clinton). Wiley now runs the largest communications practice at Wiley Rein LLP and represents a number of major communications-oriented organizations, including Verizon, AT&T, JP Morgan, Credit Suisse, Newspaper Association of America, Motorola, CBS, Belo, Gannett, Sirius/XM, Emmis, Gray Television, and LG. On April 25, 2011, Powell began his tenure as President & CEO of the National Cable & Telecommunications Association (NCTA), the principal lobbying association for the U.S. cable industry, representing cable operators serving more than 90 percent of the nation's cable television households and more than 200 cable program networks. Hundt is the CEO of the Coalition for Green Capital, a non-profit corporation that designs, develops, and implements green banks at the state, federal, and international level. He is also the Principal of REH Advisors, an advisory firm serving private firms.